Good afternoon, everyone. Welcome back.
After a hard-working week in the ridings, we're all pleased to be back here to start our first study of the session. As everyone knows, we're going to be talking about the forest industry.
To kick us off, we have officials from the Department of Natural Resources, whom I spoke to before the meeting started. I told them they have to set the tone for the whole meeting, so they're feeling a great deal of pressure.
We have Beth MacNeil, assistant deputy minister from the Canadian Forest Service, and Jeff Waring, director general of the economics and industry branch at the Canadian Forest Service. Thank you both for coming.
There's no need to explain to you how committees work because you know full well. I will remind everyone that we are televised today, so be on your best behaviour.
With that, I'll turn the floor over to you, Ms. MacNeil. I believe you're going to start us off.
That's correct. Thank you.
As the head of Natural Resources Canada's Canadian Forest Service, it's a privilege to be here today to engage with you on the state of play of Canada's forest sector—the challenges and the opportunities. Thank you for the invitation.
As committee members already know, forests and the forest sector play an important role in our economy, our environment, the well-being of Canadians, and our future.
With a GDP of $25.8 billion, comprising 6% of Canada's exports, and supporting more than 210,000 jobs and 300 rural communities, the forest sector is an important economic driver coast to coast. It is also one of Canada's largest employers of indigenous people, with more than 11,000 employed in the sector. We're also working to improve the recruitment, retention and development of women, a greater number of indigenous people, and new Canadians along the full value chain.
I'd like to share with you key factors influencing the sector across Canada today and why many view the sector to be at a crossroads. Some factors that are having a cumulative impact on the competitiveness of the sector are trade disputes, decreasing forest fibre due to increased disturbances such as wildland fire and pests associated with the changing climate, the desire to conserve spaces and species to protect Canada's biological diversity, infrastructure capacity to get our products to market, and at times, the questioning of Canada's environmental reputation when we are a world leader in the sustainable management of our forests.
Due to one or more of these factors, we have seen both permanent and temporary closures of mills across Canada—in BC, Quebec, New Brunswick, Newfoundland and Labrador and Nova Scotia, affecting thousands of workers along the value chain.
And most recently, we have seen the impacts on the sector from the rail blockades, and we are monitoring potential impacts from the COVID-19 outbreak.
In addition, the sector is dealing with the growing trend toward protectionism, particularly from Canada's largest market, the United States. While Canada successfully resolved one trade dispute with China on dissolving pulp, and two with the U.S. on supercalendered paper and uncoated groundwood paper, U.S. import duties on Canadian softwood lumber remain in place. These tariffs greatly affect the competitiveness of lumber producers, constraining their operations. Due to the integrated nature of the forest sector, the impact of these tariffs trickles down to pulp and paper producers and other users of sawmill residues, like wood chips.
More recently, India launched an investigation on Canadian newsprint, which could result in the imposition of duties. Duties on this product could have a significant impact, as producers are already dealing with a declining market.
As mentioned, the forest sector is at a crossroads. While in some regions of the country, traditional forest sector activities and products may not be possible at the scale they once were, new opportunities exist for Canada to emerge as a world leader in the area of the circular bioeconomy using forestry and forestry-derived products as nature-based solutions to many of the challenges we are facing today. For example, there is no solution to climate change without forests.
Canada's leadership role in the sustainable management of our forests can carry over to being a leader in the transition to a low-carbon economy and the circular bioeconomy. At Natural Resources Canada, we have significant scientific programming, collaborating with provinces and territories in areas such as sustainable forest management; wildland fire; and forest pests, including research on the mountain pine beetle and spruce budworm. We look forward to operationalizing the government's commitment to planting two-billion trees as a means of increasing carbon sequestration and providing other environmental benefits, such as water conservation and wildlife habitat.
We also have industry programming with multiple benefits, including: advancing forest sector competitiveness; supporting indigenous economic development; and advancing nature-based solutions through innovative uses of wood and wood fibre.
We're using our scientific knowledge, industry intelligence, programming and partnerships to support players in the sector to diversify both markets and products and produce higher-value bioproducts. Bioproducts, biochemicals, and bioenergy can replace traditional products and reduce demand for fossil-fuel based and non-renewable materials, such as plastic, cement and steel.
The World Business Council for Sustainable Development estimates the market opportunities for the circular bioeconomy to be worth between $150 billion and $240 billion in 2030. In 2017, the federal-provincial-territorial ministers responsible for forests recognized the importance of Canada's forest to the bioeconomy and endorsed the forest sector bioeconomy framework. Canada can be a global leader in this area. Currently, NRCan is looking to support initiatives using fibre residue to produce 100% compostable bioproducts. These products would be thrown in your compost bin, not your blue box.
I'd like to share with you a few concrete examples of how the Canadian forest sector offers real solutions. We have built great tallwood buildings in recent years, like Brock Commons, an 18-storey new student residence at UBC. This building is not only an engineering and architectural showpiece, but until recently it was the tallest wood building in the world. It is also an environmental game-changer. Constructed in nine and a half weeks, it stores close to 1,600 metric tonnes of carbon dioxide and has saved more than 1,000 metric tonnes in greenhouse gas emissions. This is equal to taking 500 cars off the road for a year.
Another example is the Origine building, a 13-storey wood tower in Quebec City's Pointe-aux-Lievres eco-district, which is the tallest solid wood condominium in North America.
We are supporting remote communities, through our indigenous forestry initiative and off-diesel programs, converting their diesel-based heating systems to biomass. For instance, the Kwadacha Nation in central B.C. is converting mountain pine beetle-killed timber into fuel for a community bioenergy plant. Oujé-Bougoumou Cree Nation in Quebec is renovating its biomass heating system to improve the efficiency and reliability of its district heating system.
While workers, communities and firms are experiencing the most serious of consequences in job loss and mill closures, there is an opportunity for the federal, provincial and territorial governments to work together to transition the sector to be a real player in the circular bioeconomy, supporting workers and making our forest-dependent communities more resilient. The Government of Canada and provincial governments continue to work together with forest sector stakeholders to ensure that support measures for workers, communities and industry are aligned, fully utilized, and that gaps are identified and bridged.
In closing, while the sector faces numerous challenges with significant cumulative effects, the sector also faces numerous opportunities. Canada has the fibre, environmental reputation and the ingenuity to be one of the most competitive forest sectors in the world, and a leader in nature-based solutions and the emerging circular bioeconomy.
Thank you very much, Mr. Chair.
Ms. MacNeil, I appreciated your intervention.
To put things in perspective, I come from Saguenay-Lac-Saint-Jean, one of Quebec's major forest regions, where the Resolute Forest Products plant had to cease operations. By the way, I would like to point out that part of my election campaign was about the forestry industry, as may be evident later.
You said the forestry sector was at a crossroads, and that struck me. If my wife were to tell me that we are at a crossroads, I would be a little afraid, because that would mean that I would have to act fairly quickly.
I don't know if you'll agree with me, but it seems to me that for the last 20 years the government has failed to act on this. There are two major fronts in the forestry industry. First, there are the trade battles that have not been fought by the federal government in recent years. The other major front is research and development.
I've been hearing about celluloid pulp for 15 years. I am told that it is better than sliced bread and that it will eventually replace many components of paint and plastic. But there has never been any significant financial support from the federal government for this industry. I do not know if you will agree with me.
I kept that image in mind during my election campaign. As I was digging, I found that from the early 1970s to the early 2000s there was a collective investment of $70 billion because the technology to make the oil sands profitable did not exist. Yet it was made profitable. I do not want to rub salt in the wound, but Quebec gained nothing from this.
Now, there's a climate crisis we are going to have to face. Several specialists on the issue tell us that the forestry sector is probably one of the best placed.
That was a long preamble and I apologize. So here's my question.
For the past 20 years, federal government support for research and development has fallen short of expectations. Do you agree with me on that? That first question was a long one, forgive me.
I take your point, but we may not be reading the situation the same way. Maybe I don't have the same infatuation for these investments as you do.
I was telling you about two areas that bother me: on the one hand, research and development, and on the other, our constant trade wars with the American market.
What strikes me when I go to Europe, especially when I go to France, is all the wooden infrastructures I see. However, it is not the French who have this resource. They are not the producers of wood. When we walk around France, we see infrastructures such as bridges made entirely of laminated and glued wood. We can see many infrastructures, such as government buildings and houses, made entirely of wood.
How is it that in Canada, where we have this resource, we have not been able to develop this culture?
Why is there still a lot of reticence about wood in engineering?
Is there a steel beam or concrete lobby that wants to undermine the wood construction industry?
Thank you for coming here today. Monsieur Simard stole my first question, but I'll try to rephrase it. It's about the innovations in wood products, particularly mass timber and engineered wood.
I was at a forestry summit meeting in British Columbia two Fridays ago. One of the anecdotes was about a Swedish forestry company, Stora Enso, that now has 70% of its revenue coming from products they didn't make 10 years ago. I believe that mass timber innovations make up one of Canada's biggest opportunities for this, not only for the opportunity to store carbon and do good for the climate but also to provide a real domestic market for our forest products that would insulate us from, for example, India's putting tariffs on our paper or the Americans putting tariffs on our lumber.
To follow up on what Monsieur Simard said, I had a private member's bill that asked the government to basically, in so many words, do more government procurement with regard to building with wood. You mentioned wood bridges, but with regard to wood buildings, has that happened? I was told that it was happening with Public Works last year. Can you provide any information on that? These companies—for example, Structurlam in Penticton, B.C., and Kalesnikoff in Castlegar, which is building a huge plant—need that government lead to make their efforts worthwhile. They're already leaders in the field, but they want to stay there.
Mr. Chair, first of all, I would like to correct my Bloc Québécois colleague. He said that the investments made in the oil sands over the past 60 years have not benefited Quebec. That is an incredible falsehood. Investments in the oil sands have benefited Quebec, just as they have benefited Canada, of course.
I thank the witnesses for being here.
A few weeks ago, I held a meeting with people from the lumber industry in my riding of Montmagny-L'Islet-Kamouraska-Rivière-du-Loup. In the Saint-Pamphile region, which is south of my riding and close to the U.S. border, the vast majority of mills use American wood. In fact, they buy American wood in American dollars and have to pay a 20% tax. With the current exchange rate, they are therefore taxed twice as much on their exports.
Is there any negotiation between Americans and Canadians on the taxes the Americans have put in place? I know this issue has been brought before the courts, but despite that, are there negotiations taking place?
Another product made in this region is cedar shingles that are put on the walls or roofs of houses. Currently, this product is taxed, and it was not taxed under the old regime. Once again, we are affected by these new taxes.
Are there negotiations to eliminate these taxes? That is my first question.
Before we begin, I want to thank the witnesses for being with us.
I'm very happy, too, to talk about forests. Although I am the member for Sudbury, a mining town, I come from Kapuskasing, a pulp and paper and forestry town. My father worked at the Spruce Falls mill for 40 years as a welder. My grandfather helped build the mill in the 1920s and 1930s. For a long time we exported our paper to be used in the daily newspaper The New York Times, which we were very proud of.
My whole family worked in forestry. I'm very happy to talk about it. I am a forest man. I was able to benefit from the good jobs it created. Unlike my father, I was able to go to university, thanks to the good jobs in the industry.
Mr. Simard talked about investments, and I'd like to get back to that. From his point of view, it is a lack of investment. Ms. MacNeil, you talked about the investments our government has made in the forestry sector over the last four years. There is the softwood lumber action plan. We are talking about $900 million, $250 million in investments in the 2019 federal budget and another $100 million in 2018. This means that about $1.2 billion has been invested in the sector, which is a lot.
We recognize, however, that there are difficulties. That is clear.
You mentioned that we are now at a crossroads, which has implications for the sector in terms of the potential for bioproducts and the bioeconomy, and the role they could play.
I've seen that with my own eyes. When I went to Chibougamau and Chapais in Quebec, I saw the investments there and how that has transformed.... But we're also seeing all of this potential out there in this billion-dollar economy that is waiting to... and we're seeing that the transition is hard to do.
Maybe, with your expertise and what you hear.... The challenge is with the adoption. FPInnovations is doing amazing work. There's a ton of research going on, and we are world leaders in Canada.
As to the adoption of that in our commercial world, what are the impediments that we could look at in public policy as we prepare our report to Parliament? What can we recommend to Parliament?
Good afternoon everybody.
Thank you very much for giving me the opportunity to participate in this study.
My name is Elisha Ram, I'm an associate assistant deputy minister in the Department of Employment and Social Development Canada, and I work in skills and employment programming.
I have with me colleagues Alan Bulley, from our employment program and policy shop, as well as Katie Alexander from our programs operations branch.
We're here today to discuss the forest sector. You heard in the earlier part of the session that the sector is a pillar of the Canadian economy and it plays an important role in creating jobs and supporting local labour markets across the country. You've also heard that the sector is facing a number of challenges, which have resulted in some closures, production curtailment and some layoffs as well. As a result, workers and communities that depend on the sector for their livelihood are feeling the effects.
In situations such as this, our department—ESDC—stands ready to provide essential services to workers, communities and employers. These include supports such as local rapid response efforts through Service Canada; layoff prevention through the work-sharing program; immediate assistance to displaced workers who are eligible for employment insurance part I income benefits; training and re-employment transition supports that are offered by provinces and territories through the labour market transfer agreements with federal financial support; and other skills training and labour market resources available through our department.
With your permission, I will provide additional details on some of these initiatives.
As many of you are aware and as we've heard already, there was a 2017 softwood lumber action plan, which included several measures from our department to support workers and employers affected by the U.S. duties on our softwood lumber products. These included additional investment in skills training and employment supports, as well as job loss mitigation through work-sharing flexibilities.
ESDC has a number of programs and services that are currently available and can be deployed quickly to all sectors of the economy, including forestry. Service Canada actively monitors labour market conditions across the country, assesses potential local and regional unemployment effects and engages in proactive outreach to stakeholders, including employers, labour organizations and affected communities, to ensure that they are aware of the supports that are available to them.
As an example, once we learn of publicly announced layoffs, Service Canada contacts affected employers within 48 hours to assess their needs and offer information sessions. These sessions are commonly delivered in partnership with provincial or territorial representatives, which allows affected employees to learn about both federal and provincial or territorial programs and services that they might qualify for.
I've also already mentioned the work-sharing program. Work-sharing helps employers and workers avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the employer's control. Under work-sharing, the Government of Canada provides income support to employees who are eligible for EI and who work a temporarily reduced work week while their employer recovers. This allows employers to retain skilled workers and avoid the process of recruiting and retraining. It also provides workers the opportunity to continue to be employed, retain those skills and receive employment insurance during the days they are not working.
In terms of income support, employment insurance regular benefits provide temporary income support to Canadians who have lost their jobs through no fault of their own, while they look for new work or upgrade their skills. The number of weeks of EI benefits that a person can receive is based on the unemployment rate in the region and the number of insurable hours they have accumulated, up to a maximum of 45 weeks.
To support skills training and employment for Canadians, the Government of Canada provides the provinces and territories with approximately $3 billion every year under the labour market transfer agreements, which include the labour market development agreements and the workforce development agreements. This funding enables provincial and territorial governments to offer a range of skills training and employment supports to help Canadians improve their skills, search for work and keep good jobs.
Provinces and territories have the flexibility to design and deliver employment programming that meets the needs of the local labour markets. In addition to the base funding of almost $3 billion a year, through budget 2017, the Government of Canada made significant additional investments of $2.7 billion over six years to enhance the labour market transfer agreements, starting in 2017-18. This included expanding eligibility for programs and services under the labour market development agreements to allow more individuals to receive employment insurance-funded skills training and employment assistance. Under the workforce development agreements, provinces and territories have added flexibility to provide skills training and employment programming that meet the diverse needs of the clients, with a focus on those who are further removed from the labour market and those who want to upscale.
I mentioned the softwood lumber action plan. The following ESDC measures were included in the plan to support affected workers and employers in forest sector: $50 million over two years in additional targeted funding for jurisdictions under the labour market development agreements to enhance skills training and employment supports for affected forest workers, and $30 million over two years was made available for provinces and territories to undertake research projects on targeted earnings supplements with complementary employment supports to ease employment transition for affected workers. In addition, temporary special measures were introduced under the standard work-sharing program to support longer term business viability and mitigate job loss. This included extending the duration of work-sharing agreements, waiving the mandatory cooling off period between agreements, and providing employers with flexibility regarding the mandatory recovery plan that they must enter into under work-sharing. These special work-sharing measures remain available until the end of this month.
These initiatives were designed to support workers in a sector that was forecast to be facing significant job losses and closures as a result of U.S. duties imposed at the time. However, we saw that lumber prices remained quite high during the period and the sector remained profitable. This meant that the demand for the additional resources that were made available under the softwood lumber action plan was limited. Only some provinces chose to take up the additional resources that were made available for training and employment supports, and there was limited take-up of work-sharing opportunities.
Later on, given the integrated nature of the forest sector, eligibility for the workforce adjustment measures under the softwood lumber action plan was broadened to include workers affected by any trade dispute in the forest sector, not only softwood lumber. This meant that, in the second year of the funding, it was available to all jurisdictions. Five provinces accessed the funding in the second year. These included B.C., Saskatchewan, Ontario, Quebec and Prince Edward Island. This meant that provinces accessed nearly $40 million in additional targeted funding, enabling them to provide skills training and employment supports to affected workers in forestry.
In addition to these programs, our department engages regularly with colleagues in other federal departments, including NRCan, who have responsibilities for the forestry sector. We are in regular contact with the provinces and territories to understand the local labour market needs and consider how the supports that we're providing can be used to meet those needs, and we engage regularly with other stakeholders including labour, business and communities that have an interest in the forest sector. This allows us to understand their needs and consider how our programs can best support them.
Thank you for your attention. My colleagues and I will be happy to take your questions.
I listened carefully to your presentation. However, if I speak specifically about my region, I can say that the serious crises in the softwood lumber sector have led to an abnormally high rate of people losing their jobs. As you pointed out earlier, this is a difficult situation. In fact, these people have spent their lives in the forest, are of a certain age, are on the verge of retirement, are used to a certain lifestyle and, from one day to the next, have to find a new job. These transitional measures must be implemented. In this regard, I agree with what you said. Unlike my Conservative friends, I have no objection to this being applied to sectors other than wood. I will tell you why.
I have difficulty seeing how this program—which we were talking about earlier and whose acronym in French is PABO, a joke that works in French, but perhaps not in English—offers essential support to people who lose their jobs. In concrete terms, how can it support the forestry industry?
I may have missed something. Can you enlighten me on that?